The efficiency impact of open access competition in rail markets: The case of domestic passenger services in Europe

On-track competition in passenger services has traditionally been limited in European railways, with private operators offering marginal services in selected corridors in the UK, Sweden and Germany only. In recent years, a larger scale and more stable wave of open access market entry has occurred in Austria, the Czech Republic and Italy, where open access operators have gained market shares of 20-30% in long-distance corridors. Economic theory suggests that competition can result in productive efficiencies, although theories of competition are potentially outweighed by market characteristics which make monopoly a more efficient market structure when applied to the rail sector. The contestability of rail markets is further hampered by the presence of several barriers to entry as well as expansion. The literature on the efficiency effect of rail policy changes is vast, but the focus to date has been on industry structure and competitive tendering, with non-conclusive results highlighting the importance of tailoring rail policies to the specific characteristics of each network. Studies have not yet attempted to measure the industry efficiency impact of passenger open access operations, neither specifically nor systematically - which is the goal of this paper. Using a difference-in-difference estimator, we find that on-track competition has not, to date, led to major efficiency improvements across the rail systems affected - despite claims that new entrants have lower unit costs compared to incumbents. In the early days of market opening when guarantees of non-discriminatory access have not yet been fully established, on-track competition may be resulting in higher costs than in countries with monopoly passenger services. These results are based on a short timeframe and will need to be tested over a longer period, recognising that competition is a process with no instantaneous effects. An early assessment of market opening policies is crucial to inform future regulatory decisions, at a time of budgetary constraints, forthcoming European reforms under the Fourth Railway Package and growing interest in market entry by new operators

Assessing regulatory changes in the transport sector: An introduction

The specific characteristics of transport services and markets, including their importance in socioeconomic terms, are such that Regulatory Impact Analysis (RIA) is particularly likely to yield major benefits when applied to transport policy. However RIA in transport is not as widespread as in other sectors given the presence of some major barriers. This paper explains the aspects of a good practice RIA system for transport regulations. It describes the rationale and the benefits of RIA frameworks and provides advice on dealing with the practical realities of implementing RIA in the transport sector. It concludes with recommendations for governments seeking to implement RIA within their jurisdictions

The 2018 Indicators on the Governance of Sector Regulators - Part of the Product Market Regulation (PMR) Survey

Complementing the Product Market Regulation (PMR) survey, the Indicators on the Governance of Sector Regulators map the regulatory arrangements of 130 regulators across 38 countries and five network sectors: energy, e-communications, rail and air transport, and water. The indicators are structured along three components: independence, accountability and scope of action. For the 2018 update, the OECD Secretariat and delegates of the Network of Economic Regulators (NER) revised the structure and content of the survey based on new best practice principles, guidance documents and the growing body of work of the NER on the performance of regulators. The analysis shows that, while the governance arrangements of regulators vary considerably across countries and sectors, some key trends and correlations can be observed. These insights can support countries and regulators wishing to benchmark their governance practices and reform their governance arrangements

Recommendations for Green and Healthy Sustainable Transport - "Building Forward Better"

The pan-European region has been at the forefront in the development of sustainable mobility solutions focusing on health, environment and prosperity. The Transport, Health and Environment Pan-European Programme (THE PEP) brings the countries of the region together, unites three core sectors of the economy – transport, health and environment – and provides countries with the opportunity to share best practice and develop new policies. It therefore provides a platform for accelerating transformation in the transport sector and making this transformation irreversible. The recommendations, developed by a task force under THE PEP, will allow member States to lock in sustainable transport solutions for the future, given the changes to the sector brought on by the coronavirus (COVID-19) pandemic. At the meeting of the Bureau of the Steering Committee of THE PEP in April 2020, member States discussed the COVID-19 situation, its impact on transport, environment and health in their countries and the need to take action. Participants agreed to establish a THE PEP Task Force on “The Development of Green and Healthy Sustainable Transport Recommendations” to facilitate the transition to a new normal with sustainable and healthy transport solutions at the heart of decision-making and “building forward better”. The objective of the Task Force was to make a synthesis of the “main lessons” learned from the COVID-19 crisis and to propose a set of recommendations in order to support countries in making the transition to green and healthy sustainable transport:1 a transition in line with the goals of THE PEP,2 the Vienna Declaration of the Fifth High-Level Meeting of the Ministers of Transport, Health and Environment, the 2030 Agenda for Sustainable Development and the Paris Agreement,3 to name the key processes and instruments. The Task Force was composed of over 50 experts from national ministries, international organizations, city authorities, intergovernmental and non-governmental organizations (NGOs), academia and industry. The Task Force was chaired by the Chair of THE PEP Steering Committee, Mr. Robert Thaler (Austria).The first draft of the recommendations was discussed at the meeting of the Steering Committee of THE PEP in November 2020 and, following further consultations, was finalized in January 2021.4 The recommendations identified in chapter III below were then included in the Vienna Declaration to be signed at the Fifth High-level Meeting on Transport, Health and Environment in May 2021